Insider Info

When Teresa Martinelli-Lee got into the vending business, she never expected to be playing cops and robbers.

But not long after Claremont Graduate School began operating vending machines, Martinelli-Lee found herself smack up against a roving gang of vendor thieves and she was bent on catching them.

The thieves had a special tool they used to break the locks. "It got quite expensive," says Martinelli-Lee, food services manager for the college in Claremont, California. Shortly after a description of the thieves was posted, she spotted a young fellow with a driver chauffeuring him from one building to another.

"I ran up to the lounge, called security and we cornered him -- just about caught him in the act," she says. "Turned out the car was stolen, and we had to go to court as witnesses. You think you're in food services and then you end up getting into something pretty unusual, just like on TV."

Naturally, that's not the typical life of a vending machine operator, but it does prove the job has more complexities to it than most people imagine.

Martinelli-Lee says vending has been a profitable undertaking for the college. Depending on the type of machine, lease and location, they can turn a profit within two to five years. "It isn't a full-time venture, but it is something."

For Ricardo Fiske, who operates his own vending company in Encino, California, it is a full-time business.

Fiske was almost drawn into the business a number of years ago, but got cold feet when marketing firms made claims about wild profits. After investigating the business thoroughly, Fiske concluded there are good profits to be made, but only with a significant investment of time and capital.

Fiske, who is author of the Buyer's Guide for Vending Opportunities, doesn't want other people to fall for similar marketing ploys. He recommends people have a good grasp of basic accounting and communication skills to keep on top of things.

"You hear about people's life savings going down the drain," he says. He offers the following basic steps for getting a successful operation going:

• Deal strictly with reputable companies
• Find a location for your machine first, then purchase the equipment
• If you're working with bulk candy machines, you'll need at least 100 locations to make a good living -- say $30,000 a year

"A high-traffic location like a nightclub could bring in $200 to $500 per month. But that's not your average machine, so you'll need other machines that bring in $10 a month to add to that," Fiske explains. "It's still good if you have a lot of little ones -- it's volume in vending that works."

Following that formula, Fiske estimates you would spend 2.5 days a week collecting the cash and doing the necessary servicing. The initial cost to purchase bulk candy machines is as low as $80 to $100 per unit -- much less than purchasing a large dispensing machine, which can cost thousands of dollars.

"From an accounting point of view, it's low risk," says Fiske, who spent 10 years as a controller and accountant. "But you're also out meeting people, going to new locations and building business relationships."

Not everyone is so well prepared. Robert Witt started operating vending machines as a home-based business. He now has 14 machines in all, and he's finding it's tough slogging.

"The main thing, once you've got your machine into a site, is to keep track of the paperwork," says Witt. "You need to know how much is sold and of what. You can't rely on memory or you could end up pulling the product that sells."

You have to make sure you have all the stock available. In order to get a 12-selection machine up and running -- one stocked with chocolate bars and potato chips -- you will need 232 items just to stock the machine. That translates into about $220 to stock the machine, plus another $30 or so in coin change.

Witt has a good location for one of his machines, but others are barely making any money. "There's no way you could make a living at it unless you had a lot of money behind you and a lot of time," he says.

Even so, Witt, who has a full-time job as an air traffic controller, enjoys the vending business. "It takes me completely away from my regular job," he laughs.